If rumors are to be believed, Apple and Amazon are both working on tablets that would invade each other's turf. The latest scuttlebutt has Amazon preparing for a 10-inch Kindle Fire: DigiTimes reports that "market rumors" are pointing to a 10-inch Amazon tablet launching in the third quarter of this year.
While Amazon is notoriously tight lipped about its sales figures, the Kindle Fire has been pegged as the number one selling Android tablet on the market, with a 54 percent share among a vast field of competitors. With such a commanding lead, it makes sense that Amazon would set its sights on expanding the Fire line, and taking on the iPad in the 10-inch tablet market.
The irony, of course, is that Apple is rumored to be working on a 7-inch iPad mini. The smallish 7-inch form factor -- once blasted by Steve Jobs as being dead-on-arrival -- is actually doing quite well for Amazon's Fire, and conventional wisdom says Apple is finding the prospect of lucrative 7-inch iPad sales too hard to ignore.
Both companies' tablets support robust digital ecosystems that make money on their own. Apple makes a tidy profit on all its iPad sales, but also takes a 30 percent cut of all iOS app sales. And of course Apple makes money on iTunes movie, TV show and music sales as well.
Amazon, meanwhile, takes a different route: It doesn't make any money on its rock-bottom-priced, $200 Kindle Fire, but recoups everything on the back end (and then some) via all the digital and physical goods it sells via the tablet, a veritable gateway drug to rampant consumerism. Thanks to this pricing model, the company could effectively subsidize a 10-inch Kindle Fire, selling it for cost at between $300 and $350. At this price, consumers could wave off the iPad and its heady $500 entry fee, and save a bit of cash.
Of course, the 7-inch Kindle Fire isn't in the same league as the current 10-inch iPad in terms of performance, U.I. and available apps. So, if Apple were to release a 7-inch iPad, Amazon could find itself up against a true competitor in the mini-tablet space. Apple has shown that it can sell hardware at a premium price and still garner a healthy profit.
With each company allegedly looking to drink from the other's milkshake, the tablet market could get very, very interesting by the end of the year.
